The heads of terms agreement sets forth the terms and conditions whereby Elephant Talk will purchase all of the issued and outstanding securities of ValidSoft and the transaction is subject to the execution and consummation of a definitive agreement which shall contain provisions customary in such type of transactions.

Upon the execution and consummation of a definitive agreement, the transaction is expected to allow ValidSoft to leverage Elephant Talk's strong international telecommunications platform to assimilate and distribute their proprietary software solutions to protect users from financial fraud while offering additional unique product offerings based on Elephant Talk's Mobile Virtual Network Enabler platform (MVNE) technologies and converging telecommunications technologies including Long Term Evolution, Wi-Fi, WiMax and Digital Enhanced Cordless Telecommunications.

ValidSoft's patented and patent pending software is based on detecting real time electronic fraud, minimizing false positives and resolving fraudulent transactions in a fully automated manner while protecting the privacy of the individual. False positives often results in the denial of legitimate transactions which the company believes to be one of the leading reason for customer dissatisfaction with their bank and increased processing costs for the financial institutions. Due to ValidSoft's ability to detect electronic fraud and eliminate an estimated 95%+ of false positives, the software is expected to offer issuing banks and institutions significant operational cost savings, high customer satisfaction, greater customer protection, higher transaction completion and significantly reduced fraud.

Mr. Steven van der Velden, Chief Executive Officer of Elephant Talk Communications, states that "The combination of ValidSoft's paradigm shifting software, deep-rooted relationships with Fortune 500 companies and knowledgeable management team coupled with Elephant Talk's premialk's premier telecommunications infrastructure is expected to create one of the strongest anti-fraud solution on the market. The addition of ValidSoft to Elephant Talk's platform of service offerings will provide the company with a distinct advantage over our competitors. We will aggressively target major banks, financial institutions and government agencies in order to implement our revolutionary approach to controlling worldwide card fraud." Mr. van der Velden further states that "Elephant Talk believes that we will be fully equipped to be the global leader in fraud prevention by utilizing our global telecommunication footprint, while we remain focused on our ultimate goal of expanding market share in our current offerings. Our management team believes that this is the best way to deliver increased earnings and improved shareholder value in the near term."

Several well-known banks have already concluded testing of ValidSoft's software and have determined that electronic card fraud and false positives were substantially eliminated. The company is now in negotiations to implement its products and services with banking and financial institutions around the world. According to Javelin Research, it is estimated that the total cost of card fraud in the United States in 2008 cost financial institutions over $50 billion whilst Gartner Research predicts that the loss from card related fraud will triple over the next 3 years. ValidSoft believes it possesses the solutions to assist in the prevention of the massive losses attributable to fraud that the current preventative technologies cannot stop.

Pat Carroll, Chief Executive Officer of ValidSoft, states that "The ownership and management of ValidSoft believes that this combination with Elephant Talk will allow our innovative software to be brought to the market much more efficiently and rapidly by leveraging Elephant Talk's highly efficient mobile networks. With our proven track record of success, via our paid trials with major banks, we are confident that our technology can substantially eliminate bank fraud and identity theft, provide peace of mind to customers and promote better business practices. It is our goal to establish ourselves as a worldwide leader in fraud prevention and we believe that this partnership will help us achieve that goal."

ValidSoft's capability is based on a real-time, risk-based, Out-of-Band Multi-factor Authentication and Transaction Verification platform with solutions designed to help prevent fraud across a variety of transaction types and channels including: Card Present (CP) & Card Not Present (CNP) fraud and false positive detection, identification and resolution; Internet Banking; Telephone Banking; Mobile Financial Services; Extranet; VPN; Remote Access; and Business Continuity. The solutions are disability enabled, environmentally friendly and based on telecommunications technologies thereby providing a high level of security up to non-repudiation level where required, based on the banks risk policies.

Mr. Martin Zuurbier, Chief Technology Officer of Elephant Talk, adds that "ValidSoft's technology will be successfully integrated into the Elephant Talk platform and the new technology is expected to allow Elephant Talk to present our rapidly expanding customer base with essential proprietary software solutions to combat the global epidemic of fraud. In addition to reducing card fraud and assisting banks to efficiently manage overhead costs associated with false positives for banking institutions and government agencies, it is expected that ValidSoft will offer new exciting solutions to our users such as secured Mobile Banking, Business Process Automation and other innovative solutions. These new product offerings are expected to attract new users, increase market share and expand our global footprint."